- Twitter (TWTR) is batted around by the world’s richest and most enigmatic — or perhaps erratic — man.
- There’s a real value to the service but it’s not hard to replicate.
- There’s way too much drama right now for any clear guidance.
In the fight for ownership of Twitter (NYSE:TWTR), there’s the company and there’s Elon Musk. Getting in between those two right now is like trying to break up a bar fight. The one who is certain to get hurt is the person trying to break up the fight.
In this case, of course, you won’t be sporting a black eye jumping into the fray — you’re likely just to be licking investment wounds once the whole thing winds down.
The problem is that Musk is tough to read.
It’s like watching a foreign film — not movie, film. It’s likely to go over most viewers’ heads. But some will insist it was genius for being confusing and contrary. Others will dismiss it out of hand for not being direct and clear — even when lying or manipulating us.
We’re currently in the late stages of billionaire envy in the U.S. That’s where we’ve begun to actually put together the fun-boy aspects of some of these outspoken, high-profile billionaires and how they’re running their companies.
Musk’s Tesla (NASDAQ:TSLA) has been in the press for years regarding repeated allegations and claims of on-the-job harassment. And Insider reported that Musk paid off a stewardess on his private plane for unwanted advances.
Musk Likes the Idea of His Own TWTR
But that kind of negative press rolls off his back since Americans tend to be broadly forgiving of billionaire entitlement for some reason.
Another Musk modus operandi is his ability to change subjects when he hits trouble on one front. Having several balls in the air at once has been his great advantage. When Tesla’s China operation is sitting idle and other EV companies are getting hammered, he changes the subject to The Boring Company and an influx of cash for a company that has barely delivered on any of its initial promises.
So it makes perfect sense that after his brash bid for TWTR stock, which Musk owns a large chunk of, most people would be flagged by the Securities and Exchange Commission for front running. But, of course, Musk hates the SEC and likely made the TWTR stock bid in the first place simply to poke the SEC in the eye with another sharp stick.
When you’re the richest guy in the world, you can do that kind of stuff. By “that kind of stuff,” I mean manipulate the markets without any consequence and act like an unethical market player.
And then there’s the whole bot thing. He now wants to reassess his bid due to the number of bots on the platform. But he was negotiating with TWTR days before his offer and apparently made no efforts at due diligence on this deal breaker before he made a bid.
That’s just bad business. And when it started to look like this was one of his self-promoting efforts, investors started to tire of his game. They started to sell off TWTR stock and TSLA stock as well.
I mean, how many companies can this guy run on his own? How does anyone manage these various operations successfully? It’s a hard square to circle and Musk is losing some of his shine. This happened in the dot-com bubble as well. CEOs that the press fawned over ended up with ankle bracelets or ignominy or both.
A Real Company Behind the Drama
But underneath it all, regardless of Musk’s motivations and the weakness of the TWTR board and management team, TWTR provides a profitable, valuable service. It has a product and significant brand value.
That’s worth something, for now.
But right now, TWTR stock is a billionaire’s plaything and that provides more uncertainty than it does value. There’s no reason to head into this trade (or investment) right now, as the economy is flashing massive mixed signals and volatility is high.
TWTR is a name brand, but its platform is pretty easy to reproduce. It simply emerged as the chosen SMS platform early on and consolidated power. But that doesn’t mean it will remain a growth-driven business forever.
Even CEO and founder Jack Dorsey recently stepped aside to focus on his fintech operation Block (NYSE:SQ). That may be the most telling aspect of this whole passion play.
On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.